Binary Options Forex Trading Strategies
This part of the options course will show a traders several binary options forex trading strategies, using the tools provided by Forexearlywarning. Binary options are called binary because they only have two possible outcomes. You can win on your prediction or you can lose on your prediction. If your prediction is correct, the payout on the trade is based on predetermined amounts at the start of the trade. You can only lose the amount you put up.
You can use 28 different currency pairs as your underlying asset when trading binary options with Forexearlywarning. The list of 28 pairs is all pairs comprised of the 8 major currencies. All 28 combination of the USD, CAD, EUR, GBP, CHF, JPY, NZD and AUD can be used.
Short Duration Binary Options Forex Trading Strategies
For shorter duration trades you can use the forex heatmap signals along with support and resistance. You can combine the heatmap tool with the world economic calendar to determine times of strong news drivers for all of the currencies we follow. For example, if there is an economic news driver from the EUR, check the heatmap after the news and if the EUR is consistently strong or weak you may be able to easily do a short duration trade on the EUR/USD or some other EUR pair.
For short duration trades you can use The Forex Heatmap® and support and resistance, as well as the economic news drivers. The heatmap often displays strong trading signals that would make excellent intraday trading candidates, as long as there is no support or resistance nearby.
Longer Duration Binary Options Forex Trading Strategies
For longer duration trades you must consider the trends of the market, this is the primary consideration. Trading in the direction of the trend, especially early in the trend, will be a big factor to successful long duration binary trades on any of the 28 pairs we follow. You can still get an accurate entry point using The Forex Heatmap® into a longer duration binary trade. For example if all of the EUR pairs are trending higher with no nearby resistance you can set a longer duration binary trade in the direction of the trends of one of the EUR pairs like the EUR/USD or the EUR/JPY. A pair that is starting a new trend would be a great strategy.
Binary traders should set up our free forex trend indicators on their brokers platform or charting system. Determination of market trends for any of the 28 pairs or for any individual currency can be determined using these trend indicators and our forex market analysis spreadsheet, along with our daily trading plans. These tools can help to determine which currencies are strong or weak, and what pairs are trending for longer duration binary trades.
Market Rise Or Fall From The Current Level
Choosing rise or fall can be done two ways, by determining the direction of the trend on that pair or underlying asset, or possibly buy using economic news calendar drivers. One example is that if all of the GBP pairs are all showing GBP strength using you could choose the GBP/JPY to rise from the current market levels.
For better timing or shorter duration trades, another example is to pick a currency pair ahead of an economic news driver. Example, if the GBP has a scheduled CPI news tomorrow and the pair is not trending you would set this trade with the duration to be about 3 hours after the news driver hit. You can check the world economic calendar on our website to know in advance when strong news drivers on volatile pairs are scheduled.
Higher or Lower than Target Price
In this type of trade a binary trader would set the target price and profit from the currency pair finishing higher or lower than the target price. There are several ways to approach this, if a trend is strong in one direction on a particular pair or if a new trend was starting on a larger time frame, then this pair is a candidate for this type of binary trade. If you wanted a shorter duration trade you could use a strategy of trading in the direction of the primary trends combined with The Forex Heatmap® signals to get a strong movement cycle, if there was no support or resistance nearby. Another possibility is that you could use strong news drivers from the economic calendar with a duration extending a few hours past the time of the news driver. For example, if the EUR has strong news driver tomorrow on the economic news calendar you could check the trends EUR pairs as candidates for this binary strategy. This type of trade is similar to a straddle using vanilla options.
Touch No Touch Target
With this type of binary options forex trade you set your target price, if you select no touch you could set the target price in the opposite direction of the trend. If you select the touch option you could set the target price in the direction of the trend. Then select your duration, which would likely be up to a week. If you select a short term duration like an intra day or day trade, you would use the signals form The Forex Heatmap® with no support or resistance nearby to set the touch or no touch prices. If The Forex Heatmap® gives strong signals to buy a particular pair or underlying asset you could choose the touch option with a nearby target price.
With this type of binary trade you would set two price targets and decide if the currency pair will stay inside of the two prices “in” or break out in either direction “out”. For this type of binary trade we would select a pair that is going sideways on a smaller time frame like the M5 M15 or M30 time frame. Then we would check the news calendar for strong news drivers on the two currencies that comprise the pair. For example if the USD/CAD and EUR/CAD are moving sideways in a tight range and the CAD CPI news driver is tomorrow, this would be a candidate for a breakout after the news. In this case a trader could set a trade for going outside of the price range with the duration of about 3 hours past the time of the scheduled CAD CPI news driver for the USD/CAD or EUR/CAD as the underlying assets.
As with any trading system you should demo trade these binary options forex trading strategies first, then start with small amounts of real money to reduce risk and build confidence in your system.